New home sales were at a seasonally adjusted annual rate of about 627,000 in July, a decrease of 1.7% compared with a revised 638,000 in June but an increase of 12.8% compared with 556,000 in July 2017, according to estimates released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The drop follows a month-over-month decrease of 5.3% in June.
Regionally, new home sales rose 10.9% in the West and 9.9% in the Midwest, but fell 3.3% in the South and 52.3% in the Northeast.
Year-to-date, sales in the Northeast are down 14.5% as the region deals with impacts from tax reform and persistent affordability issues
The median sales price of new home sold in July was $328,700. The average sales price was $394,300.
As of the end of the month there were about 309,000 new homes for sale nationwide – about a 5.9-month supply at the current sales rate.
“A lack of overall housing inventory is pushing up home prices, which is hurting affordability and causing prospective buyers to delay making a home purchase,” says Randy Noel, chairman of the National Association of Home Builders (NAHB), in a statement.
As Danushka Nanayakkara-Skillington, chief economist for NAHB, points out, the problem isn’t lack of demand.
“Although this month marks the lowest sales pace since last October, we continue to see solid housing demand due to economic strengthening and positive demographic tailwinds,” Nanayakkara-Skillington says. “Builders need to manage rising construction costs to keep their homes competitively priced for the newcomers to the housing market.”